Why Are Individual Inventors Important To America?

Historically, innovation by individual inventors has driven our economy by creating new jobs and companies. Consider the names of some individual inventors who ultimately formed companies to exploit their ideas, but who initially manufactured nothing: Westinghouse (air brake), Ford (car), Gillette (razor), Hewlett-Packard (oscillation generator), Otis (elevator), Harley (motorcycle shock absorber), Colt (revolving gun), Goodrich (tires), Goodyear (synthetic rubber), Carrier (air treatment), Noyce (Intel), Carlson (Xerox), Eastman (laser printer camera), Land (Polaroid), Shockley (semiconductor), Kellogg (grain harvester), DuPont (gun powder), Nobel (explosives), the Wright brothers (aircraft), Owens (glass), Steinway (pianos), Bessemer (steel), Jacuzzi (hot tub), Smith & Wesson (firearm), Burroughs (calculator), Houdry (catalytic cracker), Marconi (wireless communication), Goodard (rocket), Diesel (internal combustion engine), Fermi (neutronic reactor), Disney (animation), Sperry (Gyroscope), Williams (helicopter), even Abraham Lincoln who was granted U.S. Patent No. 6,469. These are individuals who, in most cases, worked alone, without government or corporate support, yet, created not just new inventions, but whole new industries that employ millions of people today.

It can be argued, of course, that most of these inventors ultimately created manufacturing companies and that companies who merely buy patents from individual inventors contribute nothing. That seems to be much of what you are hearing. But what about small companies that are struggling to compete against corporate giants and need a strong patent system to level the playing field? As the inventor of the MRI scanning machine, Dr. Raymond Damadian, observed, it’s the small companies (not giants that ship their jobs to India and China) who provide the economic spark for new jobs in America.

Damadian explained:

Few Americans realize that the great majority of new jobs created for the public are provided by small companies with fewer than 500 employees. From 1981 to 1988, companies with fewer than 500 employees contributed 11.7 million new jobs to the economy. In this period, America’s small companies generated two thirds of all new employment. … Unless new job-generating companies can emerge through patent enforcement, employment can only decline. Only enforced patents and the temporary monopolies they provide can ensure the emergence of these companies and their prospering.

American’s Forgotten Asset – Patent Law Enforcement, Saturday Evening Post (1994).

Can anyone cite what section of the Constitution or the patent law reserves the right to obtain and enforce patents exclusively for large manufacturing companies? And how can an individual or small company compete against a large company that decides to copy without concern for the cost or risk of litigation?

I recently won a case in Toledo, Ohio, against a company that manufactured its products in China and imported them into the United States with full knowledge (indeed, opinions) that it was infringing. “Who cares?” they thought. But an American jury felt otherwise, finding the infringement willful and deliberate and awarding damages in the form of a reasonable royalty on all sales. Our client was not a competing manufacturer.  But why does that matter? It owned a United States patent and paid a royalty to the inventor.

As former Chief Judge Howard Markey of the Federal Circuit said, individuals have as much right to benefit from the patent system as corporations:

The patent system encourages inventors to invent and disclose. Corporations don’t invent; people do. Yet, the patent system also encourages corporations and investors to risk investment in research, development, and marketing without which the public could not gain the full benefit of the patent system. The right to exclude conferred by a valid patent thus deserves the same respect when that right is in the hands of an individual as when it is in the hands of a corporation.

Fromson v. Western Litho Plate and Supply Co., et al., 853 F.2d 1568, 1575 (Fed. Cir. 1988).

Listen to who is promoting the anti-inventor, anti-NPE talk. Foreign companies that make nothing in the United States and a group of giant high-tech U.S. companies that ship their jobs overseas, like Apple (who created 700,000 new jobs in China, not the United States, to make its iPhone, iPad and iPod products). Sure, there are some small companies that may rightly feel victimized, but what about the small companies owned or operated by inventors? As noted above, statistics obtained from Patent Freedom show that 56% of NPE suits are brought by the original assignees of the patents involved – the inventor’s company. And that number increases to 80% if you include companies that share royalties with inventors.

One of the comments made in response to the CES article promoting the SHIELD Act perhaps said it best: “Let’s just dissolve the U.S. patent system altogether, so that large companies don’t have to [illegally] steal the little guys’ inventions…. Why should a song writer get paid for a song he doesn’t sing — isn’t he a troll too?” And isn’t that exactly what these pending bills in Congress will do? Unless you sing the song you wrote, you are put in a special category — a “troll.” Then you are punished if you lose, while a big corporation is not.

My plea to those in power is simply this: listen to both sides before you act, please. Stop categorizing all NPEs as bad. Go after abuse where it actually exists. And, please: protect American inventors and invention, not those who copy innovation.